Dollar & Bond Yields Tumble As Core CPI Disappoints, Rent Inflation At 10-Year Lows

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by Tyler Durden
Wednesday, Feb 10, 2021 - 08:36 AM

US Consumer Prices were expected to rise for the 8th straight month in January and it did rising 0.3% MoM as expected, leaving year-over-year prices rising at 1.4%...

Source: Bloomberg

However Core CPI missed expectations, unchanged in January compared to an expected 0.2% MoM rise.

Source: Bloomberg

Used Car prices and Food-at-home saw MoM declines as Energy costs and Apparel saw the biggest rises...

Used car price acceleration appears to have peaked...

Source: Bloomberg

And on the bright side for many, shelter/rent inflation continues to slow (despite record high prices?)

  • Rent inflation Y/Y dropped from 1.84% in Dec to 1.62% in Jan, lowest since August 2011

  • Shelter inflation Y/Y dropped from 2.28% in Dec to 2.05% in Jan, also lowest since August 2011

So the NY rental collapse is why the Fed will keep inflating the biggest asset bubble for years?

Notably Goods inflation is soaring, at its highest since April 2012, with Service inflation at its lowest since Nov 2010...

Source: Bloomberg

The reaction in bonds was instant, with 10Y Yields dropping 2bps...

Source: Bloomberg

And the dollar is taking a dive...

Source: Bloomberg

However, we note that inflation indices are one to two months away from a dramatic rise due to basing effects from the pandemic lockdowns...

Source: Bloomberg

Will The Fed shrug them off as transitory?